Monday, March 24, 2014

MPACT to reopen.

 The College Savings Board just voted unanimously to reopen the MPACT program this fall.

Update: Treasurer Lynn Fitch just issued the following press release:

 
College Savings Mississippi Board Votes to Reopen MPACT
Program to be available to new enrollees in Fall of 2014 

Jackson –

Today, the Board of Directors for College Savings Mississippi voted unanimously to reopen the Mississippi Prepaid Affordable College Tuition (MPACT) program to new enrollments beginning in the Fall of 2014.  “The Board’s decision brings our thorough, deliberate evaluation of MPACT’s fiscal soundness full circle,” says Treasurer Lynn Fitch.  “The audit’s recommendations will take time to be implemented prudently,” Treasurer Fitch continues, “but the Board’s decision allows MPACT to remain an option for families in planning for a college education, in a fiscally responsible way.” 
"I thank Treasurer Fitch for looking out for the interests of taxpayers and evaluating the MPACT program," Governor Phil Bryant said. "Mississippi must continue to build an outstanding workforce, and a college education is an important component of the career path for many students."

The College Savings Board voted to defer enrollment in the MPACT program in late 2012, amid concerns that MPACT may not be sustainable due to its funding shortfalls. The Board then ordered an independent actuarial audit of the program.  This was the first time an actuarial audit had ever been conducted for MPACT. 

The audit confirmed that MPACT faced serious shortfalls and ran the risk of running out of money within the next ten years. MPACT currently faces a projected shortfall of approximately $82 million.  If the program were to be closed permanently, the shortfall would rise to $142 million.
 
As the College Savings Board works to reopen MPACT, there is a strong consensus regarding several important considerations.

·         New MPACT contracts must be priced appropriately and not add to the existing shortfall.  In 2012, before enrollments were deferred, 248 new enrollees added an estimated $211,000 to the program’s liability further reinforcing the Board’s decision to defer the program. The program must be cost-neutral for new contracts.
·         New MPACT plans will be streamlined and require more accurate pricing. 
·         The assumed rate of return on investments must be realistic.  The assumed return on MPACT’s investments had been 7.8% or higher over MPACT’s history.  In 2013, the Board voted to lower the assumption to 7.3%.  Even this more conservative assumption will need to be carefully watched, as MPACT’s average rate of return has actually been closer to 5.4%. 
·         Any changes to MPACT cannot affect current contract holders.  By law, contracts purchased before the enrollment deferral in 2012 remain backed by the full faith and credit of the State.
The Board and the Treasurer’s Office have maintained communication with the legislative leadership, keeping them updated on the status of MPACT.  In January, the Board sent a report summarizing MPACT’s challenges to legislative leaders.  Today’s vote to reopen MPACT also reaffirms the Board’s earlier resolution to seek the Legislature’s guidance, particularly regarding the program’s existing shortfall.  The decision to reopen will help minimize the funding shortfall, but new contracts will not eliminate it. 
 
After today’s vote, the Treasurer’s Office will work with the College Savings Board to implement necessary rule changes and other modifications to the MPACT program so that MPACT is reopened in a sustainable way, for both taxpayers and our future college students.



22 comments:

Anonymous said...

Did they discuss pricing?

Anonymous said...

How much money has MPACT lost since Fitch closed it down 2 years ago? I'm araid to buy a MPACT contract now for my newborn! And there are better 529 options than the MACS program also. Compare the plans and look at the returns of the others. Beats the MACS hands down!

Anonymous said...

I betya Lynn hires Frontier again! Josh Gregory, Phil Bryant, Bill Walker, Scott Walker, George Malvaney, Albert Santa Cruz, Michael Janus - "Birds of a feather fdlock together"!

Anonymous said...

Then don't and move on.

Anonymous said...

Fitch did not lose any money. This was set up by our current Lt. Governor Tate Reeves. Why in the hell are we using 7.3% for a return. That is what got us in this mess in the first place. We should be using 4.5%, that way we have some real good years and sometimes bad years to average. The article states that 5.4% has been the average. Well guess who has to pay the shortfall-WE DO! Do yourself a favor use a 529 plan thru any good mutual fund company. My return last year was 23% at Vanguard. You have control of your money not the State of Ms!
By the way, these are the same return estimates that have gotten us in trouble with the state retirement plan.

Anonymous said...

How did Fitch do with the budget this year? Did her office get any money from the legislature? The answer is No No No! Will they get any next year? The answer is No No No! How about the year after that? No No No!

Anonymous said...

How did Fitch do with the budget this year? Did her office get any money from the legislature? The answer is No No No! Will they get any next year? The answer is No No No! How about the year after that? No No No!

Anonymous said...

You people are missing the point. 3:03 what were your returns in 2008? Exactly! Where else can you GUARANTEE your investments outpace the rise in college tuition? Tuition increases will likely increase an average over 8% forever. This is like shooting fish in a barrel. I'll being writing a check this Fall, even if the tax payers are going to have to bail me out.

Anonymous said...

Is Frontier going to get her any money out of the legislature?

Anonymous said...

@ 3:52: tried to make me go to rehab, I said....no, no, no..

Anonymous said...

RE 3:52 - If you go to the legislative website, you will see that Fitch has gotten an increase every year since she has been in office. If you compare the Treasury budget year over year, FY12 compared to FY13, her office budget increased by $246,052.00 and added one new PIN; FY13 to FY14, her budget increased by $111,818.00 and added 3 new PINS; in the Senate version of FY15, her budget would decrease by $123,842.00 compared to the House version where her budget would increase by $207,892.00 - for the third year in a row. How many other state agencies were level funded those years and added no new employees. Fitch's budget has grown $357,870.00 when you compare FY12 to FY14. Fiscal conservative - I think not. She has enlarged the Treasuer's office and taken over 1/4 of the 12th floor at Woolfolk. She bought $50,000.00 in furniture and has remodeled with the help of DFA. Look at her true record when she was at SPB.
Source: FY12 SB3083; FY13 SB3008; FY14 SB2903; FY15 SB 2908.

Anonymous said...

this political stunt by a wannabe to attempt to embarrass Tate is finally over.

Anonymous said...

8:30 you are crazy, no political stunt is needed, Tate did a poor job on IMPACT allowing it to get in a mess by high estimates on returns. Had you used 4.5% like I said earlier we would not be in this mess. What do you want to do, not look into the problem and just let it become an enormous problem like the State retirement plan?

Anonymous said...

@8:29 Thanks for the info. Notice 3:52 didn't mention past budgets, only future. The feathers for the future have been plucked and the goose is cooked!

Anonymous said...

No single Treasure has more blame for MPACT's problems than Reeves. He did nothing but pump the program while the numerics went south on his watch.

Anonymous said...

The treasurer has no friends left at the Capitol. Better get better interest or admin fees cause that the only place they are gonna get any extra money. as someone said above. The goose is cooked. The bridges are burned. Screw your friends and you screw yourself. Hard to help those who won't help themselves or if they bite the hand that feeds them. The poor staff will never know why they will just have to do the best with what they got.

Anonymous said...

I think they need to elect a new Chairman for the College Savings Plans of Mississippi. After reading the code sections of Mississippi Law, nowhere does it cite that the State Treasurer shall be Chairman of the College Savings Plans of Mississippi. They need someone else to guide them! Rotate the Chairmanship among the appointed Board members.

Crystal Balls said...

Wimpy and I say 'Put CornFish in charge of all state moneys'. Hell, he's an expert on PERS and a multitude of other government controlled stuff. And he can appoint Kanguriew his Commandant Pro Tem and we'll be assured returns upwards of 1.7% forevermore (quoth the raven).

Anonymous said...

lyn Fitch is so Persona non grata at the Capitol she won't even go up there herself to talk to anyone. She has to send her flunkies to do it. Word had it she screwed over the wrong person. All the lobbyist are talking about it.

Anonymous said...

Persona non grata is a soft term to use - last year when the Legislature had the budget hearings, Fitch snubbed the committee when she didn't show up! She sent her "team" and they took the heat. Budget committee members were not happy at all with the Treasurer's office. Hell, even Lynn's own sister didn't vote for her when she ran for Treasurer! Just ask her sister and she will tell you why!

Anonymous said...

@8:25 you are so right about the budget hearings. She was to afraid to show up. She wont tell her employees why things have turned so bad between her office and the legislature. It must be frustrating for her "team" to be sent to the capitol and not know why your being rejected now. Hey "TEAM" why don't you just ask her what has happened? Everything they tried to attach to bills was pulled, on purpose. In both houses. Its now a team effort against her. There is talk that she screwed someone over but no one knows yet exactly who.

Anonymous said...

This "treasurer," when she shows up for work, or isn't buying furniture or procuring office space,is the only public official I've ever seen who wants to push all sorts of grandiose ideas from financial literacy to debt affordability studies but won't even show up for her own budget hearing. Is that leadership? Is that a demonstration of accountability? As far as college savings, she's all over the map. Think about this: her financial literacy bill passed the House with no opposition last year and she didn't even offer it this year. Made no attempt to move the Senate by simply talking to them. One can only surmise that she's not quite as passionate about issues as she often says.

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